Iran “Has Never Recognized Bitcoin as Legal Tender” – But Is it Planning its Own Cryptocurrency?

As recently as Christmas 2017, reports seemed to be coming out or Iran, suggesting that it would become something of a haven for cryptocurrencies. However, this now appears to have been little more than speculation, as fresh reports suggest that the country may in fact move to block all crypto trading. And it could even be that the reason behind this move is to pave the way for a state cryptocurrency.

Mixed Messages

It is nothing new to receive mixed messages from Iran. Notoriously secretive, it has long been at odds with major Western powers such as the US and the UK, and has been the subject of ongoing financial sanctions due to its refusal to comply on a number of international issues, perhaps most notably nuclear disarmament. Now, the Central Bank has been reported in Iranian local news as saying that Bitcoin is too risky and volatile to touch. In fact, indications are that some kind of collaboration between financial institutions and authorities is afoot, which may see a complete crackdown on Bitcoin.

However, this may all be paving the way for a state cryptocurrency to act as a digital monopoly. The ICT Minister, Mohammad-Javad Azari Jahromi, has even recently taken to Twitter to confirm the intention:

[Translation from Farsi]: In a meeting with the board of directors of the Bank of Iran on blockchain-based digital currency, the necessary measures for the pilot implementation of the country’s first digital currency were set out by using elite capacity. A pilot model for review and approval will be presented to the country’s banking system.

A New Venezuela?

The similarities are striking. Both countries are subject to financial sanctions, both are experiencing issues with their own currencies, and both are considered rebel states – at least in the eyes of the US. It would appear that an early trend is being set here; crypto’s dark side provides the opportunity for countries under sanction to raise capital, thereby effectively bypassing these sanctions and making them obsolete. The dark side of crypto has long been buried deep within the dark web, and illicit activities such as money laundering and the drug trade, but this is a very open and challenging new way to use cryptocurrency, and one that the UN and its member states may well have to address sooner rather than later.